Should the government bail out banks?

iVillage Member
Registered: 03-01-2007
Should the government bail out banks?
19
Tue, 09-23-2008 - 11:16am

Watch the latest Street Talk video to see what people on the street are saying, then please share your opinions as well.


http://video.ivillage.com/player/?id=689501

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iVillage Member
Registered: 05-14-2008
Tue, 09-23-2008 - 6:56pm

I'm all for reasonable regulation. Definately. The government should be in place to keep the private world honest. It's supposed to provide oversight to protect the consumer.

The silly thing about Fannie and Freddie for instance is that their failings were encouraged by the government and the government should be held directly responsible. Fat chance there eh?

What do I mean by their failings being the responsibility of the government?

The government demanded they make so many loans to low income folks...subprime. Remember now the government in it's attempt to help those at the bottom--in retrospect, helped create this mess by setting them up to fail. I've been arguing and predicting this for years often being told that I'm a big old meanie wienie that doesn't want poor people to get ahead. It couldn't possibly be the fact that I'm a long term landlord and I know how expensive homeownership is! Nah.

In any case the government encouraged and required that so many of these loans be made to allow more minorities and all lower income people to get their feet in the homeownership door. And the government through Fannie and Freddie guaranteed the loans so Fannie/Freddie had no worries now did they--they were government backed loans. If they were actually going to be held accountable for them with something to lose in the process they would never have made the loans to begin with.

There is a reason loans require "mortgage insurance" for those putting less than 20% of their own money down on a home purchase. There is a reason they only lend to those with a history of good financial management and income. In other words there is a reason low income people don't qualify for "conventional" loans!

So the government regulation forced them to go against most common sense lending rules but the government offered the guarantee as well so they had nothing to lose.

The government should never have been in the home loan business to begin with and is responsible in many ways for why the situation evolved the way it did. But what do I know? I sat by and watched it happen and knew one day I'd have the opportunity to add to my real estate portfolio.

That doesn't make me one bit happy though.

iVillage Member
Registered: 03-26-2003
Tue, 09-23-2008 - 7:02pm
Are you comparing Fair Lending policies with the sub prime market?

 


 


I disagree with you, but I'm pretty sure

iVillage Member
Registered: 05-14-2008
Tue, 09-23-2008 - 7:06pm

You can't have it both ways. You can't claim that government workers are all upstanding and moral people and everyone in private industry is only out for themselves.

I believe most on both sides are upstanding, hardworking moral people who want to do right by those they serve.

I know that the consequences to the individual entity are much more significant when the private industry fails than when the government fails. Private businesses fail all the time when they can't please their employees, their customers or their shareholders (if public in nature). The government just hires another oversight committee and grows itself larger when it gets something wrong.

There is danger when an organization grows so large it is no longer manageable. That's what the government has become. There isn't anyone with the knowledge of all the rules and regulations and relationships to even oversee it properly.

But do you really believe your parents would have conducted themselves any differently if they had been running their own company? Because I don't. It sounds like they would have been very successful. The thing is you are much more able to be incompetent as a government employee for a much longer period of time than you'd likely survive in the world of private industry were the consequences of your incompetency are more likely to be revealed and not tolerated.

iVillage Member
Registered: 05-14-2008
Tue, 09-23-2008 - 7:13pm

Oh no no no no no.

I'm talking about FHA loans.

You know, those requiring little to no down payments for example.....

stupid stupid stupid

There was a REASON afterall for requiring a 20% down payment and it was nothing personal against low income people.

iVillage Member
Registered: 03-26-2003
Tue, 09-23-2008 - 7:16pm
FHA loans worked so well for decades.

 


 


I disagree with you, but I'm pretty sure

iVillage Member
Registered: 07-16-2008
Tue, 09-23-2008 - 7:37pm

FHA loans worked so well for decades.

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iVillage Member
Registered: 05-14-2008
Tue, 09-23-2008 - 7:42pm

Here is some interesting commentary from someone in the business. The problem is a loosening of standards from all lenders, including FHA guidelines. The bad thing is FHA is wanting to further loosen their current standards to allow more people to qualify in an attempt to get banks to do more lending (loosen their standards which have recently been tightened) but that's what got us into the mess in the first place.

The best thing to do is to let the problem run its course. But I just don't see that being allowed to happen. Too bad.

http://thedemocraticdaily.com/2007/10/30/confessions-of-a-mortage-broker-one-perspective-on-the-impending-housing-meltdown/

iVillage Member
Registered: 03-26-2003
Tue, 09-23-2008 - 8:25pm

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So, after deregulation.

 


 


I disagree with you, but I'm pretty sure

iVillage Member
Registered: 03-26-2003
Tue, 09-23-2008 - 8:27pm

 


 


I disagree with you, but I'm pretty sure

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